A 1Q to forget for Ma’aden: Saudi mining company Ma’aden saw its net income plunge 81% y-o-y in 1Q 2023 to SAR 419.4 mn on the back of higher costs for raw materials and lower commodity prices, according to a disclosure to Tadawul. Its revenues were down 10% y-o-y in the first three months of the year to SAR 8 bn.

Several factors to blame: The fall in the bottomline was fueled by lower average realized sale prices of all products except gold, and cost of sales rising by 28% on the back of a surge in raw material and production operating costs, the disclosure said. Also contributing to the drop in net income was higher general and administrative expenses, exploration and technical service expenses, and higher finance costs due to a rise in SIBOR and LIBOR rates.

But there were offsets: The drop in net income was partially offset by higher sales volumes of all products except mainly primary aluminum and gold, lower selling, marketing and logistics expenses, and a higher income from time deposits on the back of increased investments and deposit rates. Lower non-operating expenses and a lower zakat and income tax expense also helped counterbalance the bottomline during the quarter.

Key highlights during 1Q: Ma’aden sealed during the quarter a 50/50 JV with US mineral development company Ivanhoe Electric Inc. for the exploration of copper, nickel, gold, silver and other electric metals, according to its earnings release (pdf). Framework and support agreements signed with Shareek and the Saudi Investment Ministry will support the company’s Phosphate 3 project, accelerating its completion and pushing fertilizer sales and exports. Ma’aden also said that its Mansourah-Massarah commissioning activities are still on track with an initial production date of 2H 2023. The gold project located in the central region of the country is set to be Ma'aden's largest gold project to date with an average production of 250k ounces per annum of gold.

A positive outlook: “Supply-demand dynamics are more effectively managed, raw material prices are easing and fertilizers and ammonia prices have normalized and are expected to remain in-range for the remainder of the year,” Ma’aden said. The positive outlook on supply and demand and easing raw material prices with a successful delivery of key projects would allow the company to “enhance operational capacity and enable Ma’aden to maintain FY 23 production and capital expenditure guidance.”